Elon Musk’s Self-Driving Tesla Lies Are Finally Catching Up To Him

Forbes

For nearly a decade Elon Musk has claimed Teslas can truly drive themselves. They can’t. Now California regulators, a Miami jury and a new class action suit are calling him on it.  0:00 Introduction 0:43 The California Class Action Lawsuit 2:47 Tesla's History of Self-Driving Claims 5:19 The California DMV Case 9:18 The Miami Jury Case 11:26 Overhype Versus A Lie 14:51 The "Puffery" Argument 17:55 The Board's Stance on Elon Musk 20:13 Implications for Tesla's Robotaxis 22:47 The Future of Tesla's Core Business  Read the full story on Forbes: https://www.forbes.com/sites/alanohnsman/2025/08/20/elon-musks-self-driving-tesla-lies-are-finally-catching-up-to-him/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Hi, everybody. I'm Brittany Lewis, a reporter here at Forbes.

00:07Joining me now is my colleague, Alan Oinsman, senior editor and author of The Current Climate

00:11Newsletter. Alan, thanks so much for coming on. Hi, Brittany. Always good to be with you.

00:17It's always good to be with you. You have a blockbuster story. It's titled,

00:22Elon Musk's self-driving Tesla lies are finally catching up to him. And the consequences seem to

00:28be coming in the form of lawsuits and cases, a class action lawsuit, cases in Miami and California.

00:35Let's first start with a class action lawsuit. What is it? Why is it being filed? Who's behind

00:41it? Give us the details. Right. So early this week on Monday, a federal judge in San Francisco

00:47did certify this lawsuit that's been pending for some years. Actually, it's taken a while to get

00:53to this point. But it was certified for class action status by a great many Tesla owners based

01:01in California. And their their complaint was, you know, we bought these vehicles because we'd been

01:08promised we were going to have this self-driving capability. And this stretches all the way back

01:13to 2016. When when Musk, Elon Musk first started talking about making this capability available

01:20year after year after year went by. The vehicles did not become autonomous or self-driving. And

01:27people were very frustrated because in many cases they're saying, look, this was a motivation,

01:31a motivating factor for buying this particular vehicle. I've been wronged as a result of that.

01:36The information the company was giving was not accurate. And finally, a class action was certified

01:44and it'll go forward from here, which means it's it's a case that won't be settled for some time,

01:51but it is going to court. And, you know, it could be very expensive for Tesla. We don't know.

01:58You know, it's impossible to say at this point what it could cost them, but it definitely

02:02could be quite meaningful. And more than that, it's just really sort of a reputational blow

02:07because this is a little different. Class actions often are over liability issues for safety or other

02:14problems with vehicles. This one's very specific saying, you know, the company misled us about the

02:21capabilities, the self-driving capabilities of these vehicles. I was cheated. Therefore, you know,

02:26I need recompense for that. And you and I have talked about Elon Musk at length and in every

02:33conversation or almost every conversation, you talk about his ability to over promise and under

02:41deliver. Why do you think now is the time that that pension is finally catching up with him?

02:47Well, it's it as I say, the wheels of justice move slowly sometimes. But in this case,

02:54it has been a very long time. We go back nine years to when Tesla began marketing its vehicles

03:01with the autopilot features and sensors and other hardware that enabled some degree of autonomous

03:11driving. It really was not for a few years before people started noticing that what was promised was

03:18not actually happening. And so this has been a very lengthy process. There have famously been some

03:27cases, high profile cases involving fatalities of people who were using Tesla's in autopilot mode

03:34where the company did not suffer any major blowback. The most famous case happened in Florida,

03:42an accident that occurred in 2016. At the beginning of 2017, NHTSA, the National Highway Traffic Safety

03:50Administration, determined that Tesla was not at fault for the fatality in that case when its sensors

03:57failed to detect a white semi truck crossing a freeway. The vehicle slammed right into it, killed the

04:03driver. But Tesla in that case, surprisingly, was not held liable saying, well, the system has

04:10limitations, but the driver needed to be responsible in this case and keep an eye on things because this

04:15is not a self-driving car. So that sort of set the precedent that persisted for many years where

04:21there were accidents being reported, but Tesla never really seemed to have any major punishment or

04:31financial issues related to it. There was another case that was settled a few years ago involving an

04:37Apple engineer whose Model X in autopilot mode drove into a concrete highway divider, killing him.

04:46He apparently had not been attentive and operating the system in with the autopilot mode on.

04:54They went to court, but then there was a settlement and that problem went away. We don't know how much

05:01Tesla paid the family in that case. But that really has been the pattern up until quite recently.

05:08So suddenly we have three very interesting developments that have come right at one after the other.

05:16The class action one sort of caps the other two that, you know, had already sort of happened quite recently.

05:25But it does seem that this general trend of a serious accident or customer complaints feeling

05:34they had been misled by the capabilities of the vehicle, what they thought they were buying,

05:39that seems to be coming to an end. And it's very difficult. I couldn't tell you exactly why

05:44it's happening now. But, you know, it is interesting to see that that finally at this point

05:50it is beginning to happen. So let's talk about another case. Let's stay in California.

05:58It's the California DMV, and this could potentially lead to Tesla unable to sell in the state of

06:04California. I mean, what exactly does that mean for Tesla? And will this set a precedent for other

06:09states? Maybe the 49 other states are looking at California after that ruling saying, hmm, maybe

06:14shouldn't Tesla Tesla shouldn't sell here. I mean, what does this look like? Break it down for us.

06:18Well, specifically that case you're referencing, we we heard it in July. The case has been argued

06:26by the California Department of Motor Vehicles and Tesla's attorneys by a state level court. And now

06:33we're awaiting a judge to issue a determination in that case. But the argument by California DMV is that

06:42Tesla has been committing fraud, selling these features called autopilot or full self-driving.

06:47That it has been a fraudulent commercial activity, that you are telling people with these names that

06:56the vehicles have capabilities that they do not have. Tesla's manual and Tesla's legal documentation,

07:02if you buy the vehicle, tells you that despite those names, autopilot and full self-driving,

07:08these are not actually full self-driving vehicles. And you, as the driver, need to be responsible.

07:14You have to be ready to take control at any time. But we've seen time and again, too many consumers who

07:20really didn't understand that and did feel that they were buying a self-driving car. And some people

07:25paid with their lives for that. And so that case, we are waiting to see how the judge rules. But as you

07:33mentioned, California is seeking that Tesla be barred from selling vehicles in California,

07:39at least for a month. So they want a 30-day sales suspension. So it's not forever. But that would

07:45be meaningful. That's a consequential amount of revenue. California is Tesla's biggest market in

07:51the United States. It accounts for about 15 to 20 percent of its overall U.S. sales. So losing a month

07:57of that at a time when Tesla's already seeing its sales in decline, that would be painful. There could be

08:03some additional penalties on top of that. Also, of course, Tesla is talking about adding a robo-taxi

08:11network at some point and wants to do that in California. Because of this, California DMV might

08:18not be necessarily that favorable to approving Tesla to go forward with that plan because of its past

08:25behavior. So it is a very meaningful case. This is another one that has been in the works for some

08:31time. I couldn't begin to tell you the number of times in the last five years. I've spoken with

08:37California DMV on this very topic to see what action they were considering taking. And it wasn't

08:44until this year when they finally moved forward with it. And we'll see what the decision is from

08:52the judge. She was not, shall we say, necessarily receptive to the argument that the Tesla's lawyers

08:59were making. So, you know, it could go either way, obviously, but simply based on the transcripts

09:07from the hearings. I would say California DMV probably made a strong case, but we'll see.

09:15We don't know the final conclusion of that one yet. And then bring us to the Sunshine State.

09:20Talk to us about that case in Miami. What's that all about?

09:23So this is also a big one because this, in terms of monetary value, is very large. At the beginning

09:32of this month, the jury in Miami and federal court there did determine that Tesla had responsibility

09:38in a fatal Tesla crash that killed a young woman. This happened in the Florida Keys some time ago,

09:44and the case has been making its way through court. And Tesla is on the hook for $243 million in damages

09:54in this case. There was a human driver who was also found to bear responsibility. So it was an

10:02interesting decision. In this case, the human driver of the Tesla was found by the jury to have

10:08two-thirds responsibility for the accident, and Tesla's portion was one-third. But there's been

10:15no such ruling like this. In fact, we've not seen a Tesla case involving a fatality go all the way to

10:22the jury to a final determination. So that was unusual. What we have seen in the past is when there's

10:28been a serious case like the one with the Apple engineer who died in 2018, that went to court,

10:34but then it was settled before there was any final ruling. So this was very unusual. It's not

10:42happened before, where it's gone all the way to the jury. And the jury said, Tesla, you bear some

10:47responsibility for this, and you will pay for this in the form of $243 million in damages.

10:53The company's going to appeal it, so it'll be tied up for a while. But the three of these things taken

10:58together are quite consequential, because nothing like this has happened before over many,

11:04many years of obvious concern that Tesla was over-hyping the capabilities of these features,

11:14and with serious accidents, some fatalities, and yet the company never seemed to really get hit with

11:23any major punishment. When does an over-hype become a lie? Because as you were talking,

11:30I was thinking of a comparison here, because Tesla is saying that this is a fully self-driving car,

11:37but if you read the fine print, it's not fully self-driving. You have to be able to jump behind

11:41the wheel if the situation arises. Kind of reminded me of, let's say I go to a vegan restaurant.

11:47This restaurant's touted as vegan. I expect to not have meat. And then I read the menu, and there's a

11:53little star at the bottom that says, star, semi-vegan. There's a little piece of meat in

11:58the broth. Good luck. I mean, if I were a vegan, I would never go back to that restaurant. So in the

12:04same token, if I want a self-driving car, would I go back to Tesla? I mean, what is this doing to

12:09the reputation of Tesla? It's not positive. And as you point out, the story, you know, we characterize

12:16this as lying. Because really, at the end of the day, it's hard to find another word to explain

12:24what's happening here. In October 2016, Tesla announces not only that they've developed this

12:31autopilot feature that's going to become available on their vehicles, but that all Teslas at that

12:36point, which only included two models then, that was the Model S sedan and the Model X SUV,

12:41but they would come preloaded with eight cameras and multiple sonic sensors and forward-facing radar

12:50and a new computer system. And this technology, this hardware, these sensors would give the car

12:56all the necessary capability required to operate autonomously as the software was upgraded. So the

13:05AI-enabled software, driving software, at the time of this announcement, was not

13:10quite ready, according to Elon, but soon would be, and even promised, for example, to show off how

13:17good it was, that soon after that announcement, there were supposed to be two Teslas driving cross

13:21country, fully autonomously, you know, from New York to LA. Never happened. It still hasn't happened

13:27nine years later. But I remember asking him specifically, because this was in a time when

13:32Elon took reporters' questions, something he stopped doing a while ago.

13:37The hardware that you're equipping this vehicle with, are you saying that this is sufficient to

13:44give the vehicle full autonomy in what we call level five autonomy, which is a technical term,

13:51but that designation essentially means the car can robotically drive itself under all conditions,

13:57conditions that a human would. So rain, nighttime, slick road conditions, it can operate in, you know,

14:06fully autonomous mode as a human driver would under the same conditions. And Elon said, yes, you know,

14:13the hardware we're putting on it is fully sufficient to handle fully autonomous driving. That was

14:20profoundly untrue. And the camera system and all of the hardware has subsequently been changed multiple

14:28times over the past nine years. And arguably, today, Tesla does not have a level five autonomous vehicle.

14:37So, you know, I'm not sure what else you can call that. But a lie, because a lie is when you state

14:44something that is factually untrue. And it has proven to be so again, and again, and again.

14:50So when you say yes, but the answer is no, that's a lie. Tesla's attorneys don't really see it that

14:57way. They are arguing that the comments by Musk you describe in your reporting are puffery,

15:03but are boastful exaggerations that aren't meant to be taken literally. How strong is that argument

15:10in the eyes of the law? I don't know. You'd have to ask the judge or the jury. I don't think it has

15:16been. That came up in the DMV case, and that's come up before. But it is a term in business law

15:22where you talk about puffery, where someone says, this is the greatest hamburger in the world,

15:29like in a TV commercial. I mean, how do you really prove that, right? So it's, you know,

15:34puffery is kind of this extreme statement that on the face of it, a normal person would say,

15:42a reasonable person would say, ah, you know, that's just, that's just, you know, commercial hype.

15:46You don't actually prove it. And so the lawyers are arguing that many of these comments that Musk

15:51has made over the years fall under that category. And that's really not a strong argument. In the auto

16:00industry in general, automakers are sued all the time for liability issues because cars can be very

16:07dangerous. You die in them. You know, Apple doesn't get sued for killing people with an iPhone.

16:14If the iPhone is bad, they'll probably replace it for you. And it might be an inconvenience,

16:18but it's not that big a deal. If something goes wrong in a car, people die. That's just the reality

16:24of the business. I cannot think of another example of any auto manufacturer that has been as cavalier

16:32in, in, in how it talks about safety, critical features of its products. Uh, and you never want

16:41to overpromise capability or the safety of something when it, you know, when, when the possibility of the

16:48loss of human life is there. And so that's, I think, begun to sink in that in this case, this one

16:55particular company has been very, uh, unusually bold in its claims. And in some cases things have

17:03ended very, very badly. Like in the Miami case, um, someone died because an inattentive driver relied

17:10too heavily on Tesla system, which was not adequate, you know, to, to drive safely under those

17:16circumstances. And that's why the determination was made that no, the company does bear some

17:20responsibility for this. So that case could really begin to change things, uh, in terms of others

17:27bringing similar suits against Tesla. So, you know, sometimes it takes a long time for the first

17:34one to get through, but once it does, things begin to happen. There is a precedent now, so we shall see.

17:40And people will cite in these future cases, the California DMV case, and they'll talk about this

17:45class action thing. So all of these things together do begin to create, you know, uh, some,

17:51some serious legal obstacles potentially in the future. The stakes are high, as you said, I mean,

17:57it's literally life and death. And if you or I, or any of our viewers, if we were lying to our employee

18:05or employer time and time again, even if we were boastfully exaggerating to our boss again and again

18:11we would probably get fired. So is anything happening to Elon Musk?

18:18No, as you may recall, just recently, Tesla's board, uh, announced that they were giving him

18:24a massive new stock award, uh, worth that at that particular day that the announcement came out

18:29$29 billion. Um, so it is, it is safe to say that, um, there, there is no action, uh, taken, uh,

18:38because the reality is Tesla right now is completely for good or for ill, uh, dependent

18:45on Elon Musk. Um, he has shown no indication that he's stepping away. Uh, the board has never

18:52publicly been critical of, um, his actions. Uh, and again, the fact that they've just awarded him yet

19:00another massive, uh, amount of stock at a time in which the company arguably is not doing as well

19:08as it has been. Sales are down 13% in the first half of the year. They may get a little bit of a

19:13bump in the U S in Q3 because, uh, uh, federal EV credits phase out at the end of September. So there

19:21may be a little bump, uh, in their sales, uh, in the current quarter, uh, in the U S at least because

19:28of the, uh, the end of EV credits, but pulling that aside, um, the numbers have been troubling. One of

19:33the things we've talked about recently is, you know, there has been this slowdown. They're not

19:37growing like they once were. They're down in all their key markets in the U S they've slowed in

19:42China, which has been their key to profitability for some time. Um, so on that, on that ground,

19:47you know, things don't look good. Now they're being hit with, um, these legal issues around

19:53autopilot and FSD. Uh, and that is an ongoing concern for the company, uh, because, you know,

20:01we're seeing this legal action that's happened quite recently in July and this month, but, um,

20:07it is almost a certainty that there will be more similar cases being brought against the

20:12company. And I'm also thinking about the robo taxi space. You and I have talked about that

20:18at length as well. Waymo is the dominant player in that industry, but I'm curious about Tesla's

20:24robo taxis. What do these lawsuits and legal challenges mean for that rollout?

20:28It makes it very difficult to back up Elon Musk's claims that Tesla is the leader in autonomous

20:37driving when courts are finding something different, um, that, that, that, you know,

20:44is not backed up by at least what's happening with these legal cases. Um, as you point out,

20:50you know, they're continuing with a pilot, uh, robo taxi program in Austin. Um, there've been a few

20:55disturbing reports there about, you know, near collisions and different things that were

21:00happening and they still have human, uh, uh, monitors riding in every vehicle, sitting in the

21:06front seat and pushing like an emergency stop button. If something bad is about to happen,

21:11you know, Waymo Waymo was doing that 10, maybe 10 years ago. It's like, it's, it's very far behind,

21:19but on Tesla's last earnings call, Musk again, repeats, we're going to be the leader in autonomous

21:26driving. He continues to say it, but there's very little hard data, factual data to back this up.

21:33And certainly what's coming out of the courts is, you know, juries and judges don't agree with you.

21:39You know, you can forget about my, my opinion as a reporter or my assessment, the courts are also

21:45not finding satisfactory evidence to say, Oh yes, you know, you know what you're doing. Um, and so

21:52that's very concerning because given the deterioration in Tesla's mainline business with

21:57the TV sales, um, this pivot into robo taxi is very critical, uh, for its future. If things like

22:05this, you know, death by a thousand cuts, if you keep getting hit with lawsuits around, you know,

22:11your less sophisticated driving systems, autopilot and FSD, uh, it does not build confidence that you

22:17know what you're doing and trying to operate a robo taxi system. It's as simple as that.

22:22Alan, when we have these conversations, I'm always reminded of something you reported months ago,

22:27which was a headline that you said, things are bad for Tesla. They're about to get much worse.

22:33And that could be the understatement of the century, really where we're sitting at right now.

22:38What specifically are you looking out for next then when it comes to Tesla to wrap up Q3 and

22:44beginning of Q4? Um, again, I, because I'm, I'm kind of a simple person. I, I tend to just continue

22:52to look at their core business, uh, EV sales, charging services, their battery business. Um, and,

23:00um, all of those have grown more difficult because of the change in federal administration. It's gone

23:06from a very, uh, an administration that had been very supportive of electric vehicles generally

23:11and of clean energy overall. And even with, um, you know, for charging services and improving EV

23:17charging. So Tesla, despite the fact that Elon and Biden had a terrible relationship was positioned to

23:25be an incredibly big beneficiary of, of, uh, of us policies. Um, those policies have changed for the

23:31most part. Uh, and so I continue to look at, um, their core business, um, EV sales, battery charging,

23:38uh, battery business. If those things are declining, um, I am, I remain unconvinced that they're anywhere

23:46close to this big pivot into autonomous, you know, robotaxis, uh, AI services and, um, and, and humanoid

23:55robots. Uh, at this point, I see no evidence that there's a strong business case for that stuff in the

24:00near term. You have to look at the business as it exists. One can wish and hope that they'll get

24:08all this incredible revenue from these other services. The problem is the robotaxi stuff does

24:13not look terribly impressive right now. Um, and you know, I just saw a new video from Boston Dynamics

24:20with their latest iteration of their humanoid robot, you know, packing, packing boxes that looked

24:25really impressive. I've seen nothing, uh, close to that from Tesla's optimist program. So to my mind,

24:32again, I'm a simpleton. I just look and see where are they making their money. Um, and if where they're

24:38making their money is in decline, any amount of wishing and hoping for these new businesses,

24:42you know, it, it does not guarantee it's going to happen. And so, um, I think the story remains,

24:48how do they try to fix their core business? There really should be more focus on that. They really

24:55should be developing more low cost models. Um, you know, branding has suffered quite a bit

25:01because public views of Elon have, have really soured the last couple of years. Um, so, you know,

25:09what are they doing to fix the core business? And I got to tell you, I, I'm still not seeing

25:15anything. Again, they'll get a small reprieve maybe on vehicle sales in the U S and Q3 because

25:20of the phase out of federal, uh, tax credits. The $7,500 credit goes away at the end of, of September,

25:27but that's, that's a very short term sort of thing. What, what happens beyond that? And, and I think

25:34there has been damage to the brand. Um, I see very little obvious effort to fix it. And, um, I think

25:42that just remains, you know, an unresolved issue at this point. And I think that that answer has

25:47really remained the same every time I ask it. And I appreciate you coming on and joining me talking

25:54about your investigative reporting here. And until next time, maybe we'll be talking about something

25:59else. Alan Owensman. Thank you so much. I hope to talk to you soon. Thanks, Brittany. Good to be with you.

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